INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Reasons to believe -

Assessee-trust, filed return disclosing NIL income after taking benefit of section 11. AO selected case for scrutiny assessment and passed an order of assessment under section 143(3). Subsequently, he reopened the assessment for reason that assessee had received sizable donation from one 'H', which was also a registered trust, and spent such sum on officers and directors of 'H' and claimed same as reimbursement of expenditure and such receipt was hit by section 13(3)(b). Held: Once the Court proceeds on the basis that assessee received sizable donation and AO asserted on the prima facie information available with him that such sum was spent on the officers/directors of 'H', the question of applicability or non-applicability of section 13(3)(b) in the context of the provisions contained in section 13(1)(c)(ii) would arise. When such an issue was never examined by AO during the original scrutiny assessment, the Court would be well advised not to carry out an incisive inquiry into the question which would an inquiry, necessarily be factual as well as legal. An opinion of law can be rendered only once facts are conclusively established. It is a settled law that at the stage of examining the validity of notice of reopening of assessment, the Court would not in exercise of the writ jurisdiction, go into the sufficiency of the reasons recorded by AO. Thus, appeal filed by assessee was dismissed.

Followed:Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (SC) : 1999 TaxPub(DT) 0348 (SC) Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500 (SC) : 2007 TaxPub(DT) 1257 (SC)

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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